Iowa lawmakers say budget surplus still means headaches

Published: Monday, Jan. 14, 2013 12:36 p.m. CDT

DES MOINES (AP) — After struggling with cost cutting during several lean budget years, Iowa lawmakers are now facing a financial surplus, and while that’s undoubtedly good news, it also can be as politically complicated as being cash-poor.

“It’s no prettier,” said Department of Management Director Dave Roederer, the governor’s top budget aide.

The Iowa legislature convenes Monday, with Gov. Terry Branstad set to release his budget proposal Tuesday. Fueled by a nearly $1 billion budget surplus, Branstad is expected to announce plans to invest in education and cut commercial property taxes as part of his $6 billion budget plan — both initiatives he has unsuccessfully pursued in the past.

Roederer credited the surplus to spending cuts and conservative budgeting, as well as healthy tax revenues. The governor has expressed hope that the funding and a commitment to work cooperatively with legislators will help him achieve his policy goals. Still, it will likely be a struggle, even with more money in play, given that the Republican-controlled House and the Democrat-controlled Senate have their own agendas.

Some Republicans, for example, want to focus on reductions to the income tax as part of any tax package. Roederer said commercial property tax cuts were the governor’s priority, but he would consider income tax reductions.

“We believe we are in a position to do some tax relief and do some of those things,” said House Speaker Kraig Paulson, R-Hiawatha. “We are in a position to leave more money in Iowans’ pockets.”

Senate Majority Leader Mike Gronstal, D-Council Bluffs, said his colleagues would support some tax cuts, but they also wanted to see investment in programs such as adult education and job training. Some Democrats have also said they support an expansion of Medicaid, which the governor has not signed on to.

“I think both sides have the same attitude, it’s only a matter of degree. I think Republicans agree there are some areas where additional spending makes sense. It gets down to a question of degree,” Gronstal said.

Gronstal said having full coffers raises the bar for lawmakers, which puts pressure on the budget process.

“I think the budget is always a challenge whether it’s a tight budget or a flush budget,” Gronstal said. “A flush budget raises expectations. So people look at it and say why can’t you do that.”

Last year, the Legislature adjourned without acting on proposals from Branstad to reform schools and cut property taxes. On education, lawmakers approved an unfunded policy bill that Branstad promised to revisit this year. A property tax reduction bill passed the House but failed to gather enough votes in the Senate.

That outcome prompted Branstad to say the 2012 session “may be remembered as much for what failed to be accomplished as for what actually was accomplished.” But Roederer said an influx of new members could help the governor this year. He also noted that it can take time to reach agreement on complex issues in a legislative body.

Roederer has been sending a clear message that the administration wants to be cautious with the extra funding. He gave a slideshow budget presentation to reporters last week that concluded with a slide that featured a Santa Claus dancing in front of the Capitol. In the background played the song “Macho Man,” by the Village People, with the lyrics rewritten to be about “Santa Man.”

Describing that situation as his fear, Roederer said that he wanted to use humor to remind lawmakers to tread lightly.

“Most people come in with great ideas and they want to do something,” Roederer said. “We’re asking people make sure you stand back so you see what the long term is. What is absolutely the role of government and what isn’t the role of government.”